WHAT THE PAYING TAXES INDICATORS MEASURE
Tax payments for a manufacturing company in 2010 (number per year adjusted for electronic or joint filing and payment)
Total number of taxes and contributions paid, including consumption taxes (value added tax, sales tax or goods and service tax)
Method and frequency of filing and payment Time required to comply with 3 major taxes (hours per year)
Collecting information and computing the tax payable
Completing tax return forms, filing with proper agencies
Arranging payment or withholding
Preparing separate tax accounting books, if required
Total tax rate (% of profit before all taxes) Profit or corporate income tax
Social contributions and labor taxes paid by the employer
Property and property transfer taxes Dividend, capital gains and financial transactions taxes
Waste collection, vehicle, road and other taxes
Taxes and mandatory contributions include corporate income tax, turnover tax and all labor taxes and contributions paid by the company.
A range of standard deductions and exemptions are also recorded.
2 The threshold is defined as the highest total tax rate among the top 30% of economies in the ranking on the total tax rate. It will be calculated and adjusted on a yearly basis. The threshold is not based on any underlying theory. Instead, it is intended to mitigate the effect of very low tax rates on the ranking on the ease of paying taxes.
Where does the economy stand today?
What is the administrative burden of complying with taxes in Burkina Faso—and how much do firms pay in taxes? On average, firms make 46 tax payments a year, spend 270 hours a year filing, preparing and paying taxes and pay total taxes amounting to 14.8% of profit (see the summary at the end of this chapter for details).
Globally, Burkina Faso stands at 147 in the ranking of 183 economies on the ease of paying taxes (figure 8.1). The rankings for comparator economies and the regional average ranking provide other useful information for assessing the tax compliance burden for businesses in Burkina Faso.
Figure 8.1 How Burkina Faso and comparator economies rank on the ease of paying taxes
Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying taxes.
What are the changes over time?
While the most recent Doing Business data reflect how easy (or difficult) it is to comply with tax rules in Burkina Faso today, data over time show which aspects
of the process have changed — and which have not (table 8.1). That can help identify where the potential for easing tax compliance is greatest.
Table 8.1 The ease of paying taxes in Burkina Faso over time By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012
Rank .. .. .. .. .. 146 147
Payments (number per
year) 45 45 45 45 46 46 46
Time (hours per year) 270 270 270 270 270 270 270
Total tax rate (% profit) 47.6 47.6 47.6 47.1 44.9 44.9 43.6
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the rank on the ease of paying taxes.
Equally helpful may be the benchmarks provided by the economies that today have the best performance regionally or globally on the number of payments or the time required to prepare and file taxes (figure 8.2). These economies may provide a model for Burkina
Faso on ways to ease the administrative burden of tax compliance. And changes in regional averages can show where Burkina Faso is keeping up—and where it is falling behind.
Figure 8.2 Has paying taxes become easier over time?
Payments (number per year)
Total tax rate (% of profit)
Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. The best performer globally on an indicator has implemented the most efficient practices in its tax system but is not necessarily the one with the highest ranking on the indicator.In some cases 2 or
more economies share the top regional ranking on an indicator. DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying taxes.
Economies around the world have made paying taxes faster and easier for businesses—such as by consolidating filings, reducing the frequency of payments or offering electronic filing and payment. Many have lowered tax rates. Changes have brought
concrete results. Some economies simplifying tax payment and reducing rates have seen tax revenue rise. What tax reforms has Doing Business recorded in Burkina Faso (table 8.2)?
Table 8.2 How has Burkina Faso made paying taxes easier—or not? By Doing Business report year
DB Year Reform DB2012 No reform.
DB2011
Burkina Faso reduced the statutory tax rate and the number of taxes for business and introduced simpler, uniform compliance procedures.
DB2010 No reform.
DB2009
The corporate income tax rate was reduced from 35 percent to 30 percent (effective January 1, 2008), and the tax on dividends from 15 percent to 12.5 percent.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org.
What are the details?
The indicators reported here for Burkina Faso are based on a standard set of taxes and contributions that would be paid by the case study company used by
Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Tax practitioners are asked to review standard financial statements as well as a standard list of transactions
that the company completed during the year. Respondents are asked how much in taxes and mandatory contributions the business must pay and what the process is for doing so. The taxes and contributions paid are listed in the summary below, along with the associated number of payments, time and tax rate.
Summary of tax rates and administrative burden in Burkina Faso
Indicator Burkina Faso Sub-Saharan Africa OECD high income
Payments (number per year) 46 37 13
Time (hours per year) 270 318 186
Profit tax (%) 14.8 18.1 15.4
Labor tax and contributions (%) 22.6 13.5 24.0
Other taxes (%) 6.2 25.5 3.2
Total tax rate (% profit) 43.6 57.1 42.7
Tax or mandatory
contribution Payments (number) payments Notes on (hours) Time Statutory tax rate Tax base
Total tax rate (% of profit) Notes on total tax rate Social security contributions 12 120 16.0% gross salaries 18
Corporate income tax 1 30 27.5% taxable
profits 13.8
Business license 1 0 8% + fixed amount assets 4.7
Payroll and apprentice tax 12 0 4.0% salaries gross 4.5
Capital gains tax 1 0 10.0%
gain on property
sale
1
Mortmain property tax 1 0 10.0%
property value after deduction
contribution (number) payments (hours) tax rate profit) rate Motor vehicle tax 1 0 50.000 XOF weight of truck 0.4
Sales tax 1 0 12.5% interest income 0.3
Tax on insurance contracts 1 0 20.0% insurance premium 0.2
Fuel tax 1 0 included in fuel price 0.1
Advertising tax 1 0 0 small amount
Stamp duty on contracts 1 0 200 XOF per page 0 small amount
Value added tax (VAT) 12 120 18.0% value added 0 not included
Totals 46 270 43.6
Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying taxes.
In today‘s globalized world, making trade between economies easier is increasingly important for business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to extra costs and delays for exporters and importers, stifling trade potential. Research shows that exporters in developing countries gain more from a 10% drop in their trading costs than from a similar reduction in the tariffs applied to their products in global markets.
What do the indicators cover?
Doing Business measures the time and cost (excluding tariffs) associated with exporting and importing a standard shipment of goods by ocean transport, and the number of documents necessary to complete the transaction. The indicators cover procedural requirements such as documentation requirements and procedures at customs and other regulatory agencies as well as at the port. They also cover trade logistics, including the time and cost of inland transport to the largest business city. The ranking on the ease of trading across borders is the simple average of the percentile rankings on its component indicators: documents, time and cost to export and import.
To make the data comparable across economies,
Doing Business uses several assumptions about the business and the traded goods.
The business:
Is of medium size and employs 60 people.
Is located in the periurban area of the economy‘s largest business city.
Is a private, limited liability company, domestically owned, formally registered and operating under commercial laws and regulations of the economy.
The traded goods:
Are not hazardous nor do they include military items.
WHAT THE TRADING ACROSS BORDERS